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Unchanged rates a boon for property market

Cape Town - Widely anticipated by market commentators, Thursday's decision by the Monetary Policy Committee to leave the repo rate unchanged at a historic low, is reassuring for aspirant and existing home buyers, said Dr Andrew Golding, CEO of the Pam Golding Property group (PGP).

“This provides a stable environment conducive to making long term financial decisions, such as acquiring property, and helps fuel positive sentiment in the residential property market," he said.

"Bearing in mind that there are a variety of factors which impact on the MPC’s decisions regarding the repo rate, it is anticipated that the repo rate will remain at current levels during 2014."

The combination of a stable and low interest environment creates a climate of certainty, which provides further impetus for the property market, according to Golding.

“It is encouraging that what we are currently seeing in the housing market are purchase decisions which reflect traditional reasons for acquiring a home such as relocation, medium to long term investment, upgrading, downsizing, retirement, accommodating a growing family, or simply gaining that first foothold in the property market,” he said.

PGP is experiencing an ongoing increase in enquiries and transactions concluded – particularly in high demand areas of the country, such as major metropolitan areas.

"These trends, in conjunction with the prevailing historically low interest rates and pent-up demand for property, are positive signs for a sustained increase in activity and growth in property values,” said Golding.
 
"Given the stable, low interest rates, the current market still presents sound buying opportunities for purchasers across the various price sectors."

He said the key criterion of location is the first consideration when buying a home, particularly from an investment perspective and if the intention is to hold the property over the medium to longer term.

Buy to let properties should be in a good area, such as a thriving node, with good access to transport and highways.
 
“As the market has recently been characterised by significant demand in the more affordable housing sector (between R400 000 and R800 000), this also provides opportunities for investment with sound capital growth potential," said Golding.

"In addition, many sectional title residential developments offer good  value for money, particularly for the first time buyer, and a well run complex in a good area can offer an excellent return on investment over the medium to long term, coupled with the fact that they involve lower maintenance.”

Seeff chair Samuel Seeff also said a stable interest rate is good news for the housing market and consumers.

"Right now, a stable interest rate is the best course for the property market and in fact for the economy as a whole," he said.

While there have been some calls to lower the interest rate, Seeff said that such a move could encourage short term spending, something that is do not need right now in his view.

"It is vital that consumers start saving and that we encourage and foster a strong savings culture," said Seeff.

"Now more than ever, we would encourage home owners to invest their annual bonuses and any spare cash into their home loans, something that will stand them in good stead to weather future interest rate hikes."

- Fin24

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